The Big Squeeze?

By Frank Buhagiar on Monday 16 January 2023

The Big Squeeze?
Image source: The Big Squeeze?
CommentaryFoodTech Investment

Food on the Move: FFF’s weekly roundup of listed FoodTech’s movers & shakers

No Friday 13th bad luck for FFF’s listed-FoodTech space.  The week ended Friday 13 January saw the FoodTech sector maintain its 100% start to the year, at least in terms of share price risers outnumbering fallers.  For the record, the week saw more than three times as many risers than fallers – 35 risers, 11 fallers and three non-movers. Ok, 2023 is only two trading weeks old, but the question is this: is a hat trick on the cards?

As with the previous week, there’s another share price doubling to report – AppHarvest (APPH) shares were up an eye-catching 121% to US$1.87. No news out, but the vertical farmer appears to be still basking in the afterglow of its US$127 million sale-leaseback deal for its Berea indoor leafy greens farm.  The shares have now quadrupled from the US$0.46 level they were trading at as recently as mid-December.  But after such a stellar run, will APPH succumb to “followingweekitis”, a not uncommon affliction that typically sees shares hand back gains after a bout of profit-taking?

Time will tell but, thanks to Boxed (BOXD) which saw its share price double over the first week of January, there is a very recent precedent.  How did the online retailer, which launched “a process to explore strategic alternatives, including, among other alternatives, a possible sale of the Company”, fare the week after its market cap doubled? With a further 63% gain, that’s how! Shares closed at US$0.637.  The company did follow-up last week’s news with a press release announcing, “…that Spresso, its SaaS modular solution platform, is now available on the Google Cloud Marketplace, indicative of a deepening of the partnership between Boxed and Google Cloud.” Not a shoot the lights out release, but anything to keep the momentum going, hey?  So, based on the BOXD experience, what price an APPH announcement in the week ahead? One to keep an eye on…

Two other names to watch out for are Agrify (AGFY) and Hydrofarm (HYFM) – up 88% and 34% to US$0.66 and US$1.69 respectively.  Zero news out from either of the two indoor agriculture/cannabis solutions providers but most of the gains were made on Friday 13th (lucky for some it seems).  Once again, will be interesting to see if any press releases appear over the next few days.   Yet another mystery riser in the form of online delivery platform ASAP (ASAP) – shares were up 71% to US$0.719.  As with APPH, AGFY and HYFM no news out, and as with APPH, AGFY and HYFM, most of the gains were made on Friday 13th. Spooky or what?

No announcements from Blue Apron (APRN) either, but (surprise surprise) that didn’t stop the shares tacking on 38% to close at US$1.01.  That US$1.01 price is key, as Seeking Alpha explains: “The bounce…brings the market cap to over $50M and the stock price above $1, two problems that had handed the company a NYSE non-compliance notice in late December.” Appears the recovery in the share price may have triggered a short squeeze – shorters who had bet on a falling share price scrambling for stock to close out their positions.  And there could be more to come as “Short interest in the name remains elevated, charting at 44.15% of its float, according to Seeking Alpha data.” Add meal kit co. APRN to next week’s growing watch list…

Hmm…stellar gains made by companies who can barely muster a press release between them.  What’s more, these same companies are, or have been, trading close to the key US$1 level, below which companies fall foul of listing rules.  And why do share prices flirt with non-compliance notices? Lots of reasons, but a lack of funds is typically near the top of the list.  A target-rich environment then for shorters looking to bet on further share price falls.  But what happens when the bet is looking shaky, for example because the company puts itself up for sale (BOXD); or secures a sale and leaseback agreement (APPH); or closes an US$8.7million Placing (AGFY); or the share price recovers (APRN)? Or what happens if the shorters are a superstitious bunch who get the heebie-jeebies every Friday 13th? Shorters wanting out.  The final question of the week is: could it be that listed FoodTech is benefiting from the Great Short Squeeze?